Despite Brexit Gains, All Fundamental Difficulties Remain

By Jack Reynolds and Bart Oosterveld

UK Prime Minister Theresa May might have secured a major victory in the Brexit process, but she still faces exceptional political, social, and economic challenges in the second phase of negotiating the United Kingdom’s separation from the European Union (EU). European Council President Donald Tusk has already stated the latter half of the negotiations “will be more difficult than the first.”

On December 8 May achieved what many skeptics of the process did not consider possible, an agreement with the EU to further negotiations to define at least an outline of what the future trade relationship between the UK and the EU will look like.

While negotiating the future of London’s relationship with Brussels, May had to overcome the consternations of the Democratic Unionist Party and the Irish government to allay fears of a return to a hard border in Northern Island, while additionally circumventing cabinet infighting over the magnitude of the “Brexit Bill.” By achieving this agreement, she may have just saved her job. With the twenty-seven member states of the EU now agreed upon continuing discussions through to the second phase of negotiations, the future trading relationships between the UK and EU can now begin.

However, the state of UK domestic politics indicates that the road to London’s separation from Brussels will be long and complicated. May’s cabinet remains exceptionally divided, with prominent Brexiteers fearful the new agreement with the EU could scupper their chances for a post-Brexit “Global Britain,” an economic and trading powerhouse that the world eagerly seeks to do business with. The UK Parliament is still weighted against May, with an invigorated Democratic Unionist Party using their support of the current Conservative government to extract important concessions and Jeremy Corbyn’s Labor Party more than willing for the Tory Party to own the Brexit process due to the electoral downside of association with an eventual agreement with the EU that is (perceived to be) unfavorable.

These divisions are yet more apparent in the British public. The Independent reported that those in favor of the UK remaining in the EU hold a ten-point lead in public opinion over those who wish to leave the Union—the biggest gap since June 2016, when the Brexit vote took place.

Despite May’s significant gain, the fundamental difficulties of the Brexit process largely remain. Phase one focused on the financial arrangements, citizens’ rights, and the Irish border dispute (which remains unresolved). Now, phase two will confront the future trade and economic balance and relationship.

May has stated she hopes for a deal that “secures the best possible trading terms with the EU, allows the UK to set rules that are right for our situation, and facilitates ambitious third-country trade deals.” EU Lead Negotiator Michel Barnier, however, has said that “cherry-picking” is unacceptable in this situation. The UK will not be able to walk away from the Union taking only what it wants and without concessions. Personalized or specifically tailored trade deals with the Union are unavailable to the UK, notably any agreement concerning financial services unless the UK remains in the single market. This disagreement, which has roots in UK Foreign Secretary and avid Brexit supporter Boris Johnson’s quip that the UK will “have our cake and eat it,” with regard to the Brexit deal, will define May’s time in office.

Further, the short time frame of the negotiations, which must be concluded by March 2019, will additionally exacerbate the pressure placed on a swift and productive negotiations. While Mays’ success in securing the December 8 agreement on future trade arrangements is a significant step, she has far to go toward any assurance of success.

Procedural approvals further can further affect the timeline and increase the complexity of negotiations. Any trade deal between the EU and UK has to be approved by the European Parliament (EP). Its members must vote by simple majority to approve the draft deal, to which they can add amendments of their own. According to Barnier, for the EP to have enough time to examine, debate, and ratify the withdrawal agreement treaty, the formal agreement on the UK’s terms of separation from the EU, it should be presented to the EP by late fall 2018. Once the EP approves the treaty, it passes to the European Council. The Council can pass the treaty through a qualified majority vote which requires the vote of at least twenty of the twenty-seven member states, and 65 percent of the EU population. Additionally, if a deal on the nature of a future relationship is made between the UK and EU, it will require unanimous support of Council members. The Council is also the only body that can extend the negotiations, which also requires unanimous approval.

Once approved by the Council, the UK government will be asked to ratify the treaty. Both Houses of Parliament (Commons and Lords) will be given the opportunity to pass a resolution, but will only have twenty-one days to consider the proposal. If either House votes against the draft, the government cannot ratify but must instead produce a statement giving the reasons it wants to proceed. If the House of Commons subsequently votes against the draft, the treaty cannot be ratified by the UK and the twenty-seven members of the EU will not be asked to proceed with their internal ratification procedures. In this case, the UK will have no option but to separate from the EU in a legal and political vacuum. Given this is such an exceptional circumstance, it is unknown what will happen if this were to occur.

In the case of a mixed agreement from the UK Parliament, the ratification process will then move to the national procedures within each of the twenty-seven EU member states. This process means the new EU-UK agreement will have to be approved by national and even sub-national parliaments, depending on the constitutional requirements of each member state.

There are certainly many inherent risks involved in putting a tenuous agreement through such an extensive approval process, as there are many examples of national ratification processes that have derailed treaties and deals previously agreed at the supranational level. Furthermore, the rejection of the agreement by fourteen of the twenty-seven voting countries could subject the agreement to a referendum in which all EU members will have a vote, thereby introducing substantial uncertainty. This is uncertainty is not unfounded, with the region of Wallonia in Belgium famously derailing the Canada-EU trade agreement in 2016. There is also no deadline for national parliaments to discuss ratification, and with all upper chambers included, it would potentially require the approval of at least thirty-eight parliaments.

All the issues described above, alongside the extensive ratification procedures, must be completed by March 2019 according to both the UK and EU. It is evident that the greatest hurdle May must overcome is simply time.

Jack Reynolds is a former intern in the Global Business and Economics Program.

Bart Oosterveld is director of the Atlantic Council’s Global Business and Economics Program.